Cemptex Corporation prepares its statement of cash flows usi

Cemptex Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2018 fiscal year was $659,000. Depreciation and amortization expense of $94,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilties other than cash: Decrease in accounts receivable Increase in inventories Increase prepaid expenses Increase in salaries payable Decrease in income taxes payable $29,000 9,900 9,200 10,700 18,000 Required: Prepare the operating activities section of the 2018 statement of cash flows. (Amounts to be deducted should be indicated with a minus sign.) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities

Solution

Cashflow from operating activities (Indirect method)

Particulars

Amount

Cash flow from operating activities

Net income for the fiscal year

$6,59,000

Adjustment for non-cash effects:

Depreciation and amortisation

$94,000

Changes in operating assets and liabilities:

Add: Decrease in accounts receivable

$29,000

Less: Increase in inventories

($9,900)

Less: Increase in prepaid expenses

($9,200)

Add: Increase in salary payable

$10,700

Less: Decrease in income tax payable

($18,000)

Total

$2,600

Net cashflows from operating activities

$7,55,600

Cashflow from operating activities (Indirect method)
Particulars	Amount
Cash flow from operating activities
Net income for the fiscal year	$6,59,000
Adjustment for non-cash effects:
Depreciation and amortisation	$94,000
Changes in operating assets and liabilities:
Add: Decrease in accounts receivable	$29,000
Less: Increase in inventories	($9,900)
Less: Increase in prepaid expenses	($9,200)
Add: Increase in salary payable	$10,700
Less: Decrease in income tax payable	($18,000)
Total	$2,600
Net cashflows from operating activities	$7,55,600